Property-casualty insurer and producer groups are putting a positive spin on the Democrats' dramatic takeover of the U.S. Congress. In our NU cover story this week, a host of political bigs in the industry express confidence they'll be able to work with the Dems who will rule Capitol Hill come January, and speculate that some issues on their agenda might even get a more sympathetic hearing.
The best bet for the industry under the Democrats is in convincing Congress to once again extend the Terrorism Risk Insurance Act–and perhaps even replace it with a more permanent facility. After all, it was Senator Hillary Clinton who said keeping a federal terrorism reinsurance failsafe in place to support the economy was a matter of national security, while it's been Republicans–especially those in the White House–who have been looking to kill the program and leave terrorism risks to the not-so-tender mercies of the free market.
Then there is federal regulation–whether via an optional federal charter or a federal standards approach, as envisioned in the so-called SMART legislation. I was always skeptical whether a Republican-led Congress–so averse to Big Government in Washington, and so supportive of states' rights–would ever take power away from the states on insurance oversight and hand it to yet another bloated bureaucracy run by Uncle Sam.
With Democrats ruling the roost, perhaps a federal regulatory bill might gain some traction. Did the Democrats ever see an industry they didn't want the feds to regulate??? The question is what kind of regulation would satisfy them–the casual, pick-your-poison approach of optional federal charter advocates, the even more casual federal benchmark strategy laid out by SMART…or would they go hog wild and establish a far-reaching, mandatory oversight system that the industry would come to regret?
Then there is the issue of whether we need to establish a national catastrophe fund to stabilize hurricane- and earthquake-prone states–and their insurers. Again, Republicans are usually skeptical about Big Government projects, and fearful of saddling Uncle Sam with open-ended liabilities.
But the Democrats created the National Flood Insurance Program, after all, so why not take the next logical step and upgrade our cat coverage system with a broader, more comprehensive fund–perhaps even in conjunction with a permanent terrorism reinsurance backstop? Insurers might be asked to dump their precious flood exclusion to earn passage, but if allowed to charge the premiums necessary to support such a coverage expansion, it might be worth it.
Of course, Democrats could start poking their nose into the use of credit scores in pricing insurance, or even explore allegations of insurer redlining in open hearings. They might even challenge the industry's sacred antitrust exemption under the McCarran-Ferguson Act, or at least look to scale it back. But that goes with the territory when you are dealing with Democrats.
The point is that insurers could work with this crowd if they remain reasonable and flexible.
Some of you filed some interesting comments on my Election Day blog entry. If you have any other observations, predictions, hopes or fears to share, feel free to click below and post your comments!
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